Intheessayonmoneyherefutesthemercantilisterror，whichtendedtoconfounditwithwealth。\"Menandcommodities，\"
hesays，\"aretherealstrengthofanycommunity。\"\"Inthenationalstockoflabourconsistsallrealpowerandriches。\"Money
isonlytheoilwhichmakesthemovementsofthemechanismofcommercemoresmoothandeasy。Heshowsthat，fromthe
domesticasdistinguishedfromtheinternationalpointofview，theabsolutequantityofmoney，supposedasoffixedamount，
inacountryisofnoconsequence，whilstanexcessivequantity，larger，thatis，thanisrequiredfortheinterchangeof
commodities，maybeinjuriousasraisingpricesanddrivingforeignersfromthehomemarkets。Hegoessofar，inoneortwo
places，astoassertthatthevalueofmoneyischieflyfictitiousorconventional，apositionwhichcannotbedefended;butit
mustnotbepressedagainsthim，ashebuildsnothingonit。Hehassomeveryingeniousobservations（since，however，
questionedbyJ。S。Mill）ontheeffectsoftheincreaseofmoneyinacountryinstimulatingindustryduringtheintervalwhich
takesplacebeforetheadditionalamountissufficientlydiffusedtoalterthewholescaleofprices。Heshowsthatthefearof
themoneyofanindustriouscommunitybeinglosttoitbypassingintoforeigncountriesisgroundless，andthat，undera
systemoffreedom，thedistributionofthepreciousmetalswhichisadaptedtotherequirementsoftradewillspontaneously
establishitself。\"Inshort，aGovernmenthasgreatreasontopreservewithcareitspeopleanditsmanufactures;itsmoneyit
maysafelytrusttothecourseofhumanaffairswithoutfearorjealousy。\"
Averyimportantservicewasrenderedbyhistreatmentoftherateofinterest。Heexposestheerroneousideaoften
entertainedthatitdependsonthequantityofmoneyinacountry，andshowsthatthereductionofitmustingeneralbethe
resultof\"theincreaseofindustryandfrugality，ofartsandcommerce，\"sothatitmayserveasabarometer，itslownessbeing
analmostinfalliblesignoftheflourishingconditionofapeople。Itmaybeobservedinpassingthatintheessaydevotedto
thissubjecthebringsoutaprincipleofhumannaturewhicheconomiststoooftenoverlook，\"theconstantandinsatiable
desireofthemindforexerciseandemployment，\"andtheconsequentactionofennuiinpromptingtoexertion。
Withrespecttocommerce，hepointstoitsnaturalfoundationinwhathassincebeencalled\"theterritorialdivisionof
labour，\"andprovesthattheprosperityofonenation，insteadofbeingahindrance，isahelptothatofitsneighbours。\"Not
onlyasaman，butasaBritishsubject，\"hesays，\"IprayfortheflourishingcommerceofGermany，Spain，Italy，andeven
Franceitself。\"Hecondemnsthe\"numberlessbars，obstructions，andimpostswhichallnationsofEurope，andnonemore
thanEngland，haveputupontrade。\"Yetonthequestionofprotectiontonationalindustryheisnotquiteatthefree—trade
pointofview，forheapprovesofataxonGermanlinenasencouraginghomemanufactures，andofataxonbrandyas
increasingthesaleofrumandsupportingoursoutherncolonies。Indeedithasbeenjustlyobservedthatthereareinhim
severaltracesofarefinedmercantilism，andthatherepresentsastateofopinioninwhichthetransitioniromtheoldtothe
newviewsisnotyetcompletelyeffected。
Wecannotdomorethanrefertotheessayontaxes，inwhich，amongstotherthings，herepudiatestheimptuniqueofthe
physiocrats，andtothatonpubliccredit，inwhichhecriticisesthe\"newparadoxthatpublicencumbrancesareofthemselves
advantageous，independentofthenecessityofcontractingthem，\"andobjects，perhapstooabsolutely，tothemodern
expedientofraisingthemoneyrequiredfornationalenterprisesbywayofloan，andsoshiftingourburdensuponthe
shouldersofposterity。
ThecharacteristicsofHume，whicharemostimportantinthehistoryofeconomicinvestigation，are（1）hispracticeof
bringingeconomicfactsintoconnectionwithalltheweightyinterestsofsocialandpoliticallife，and（2）histendencyto
introducethehistoricalspiritintothestudyofthosefacts。Headmirablyillustratesthemutualactionoftheseveralbranches
ofindustry，andtheinfluencesofprogressintheartsofproductionandincommerceongeneralcivilisation，exhibitsthe
strikingcontrastsoftheancientandmodernsystemoflife（seeespeciallytheessayOnthePopulousnessofAncient
Nations），andconsidersalmosteveryphenomenonwhichcomesunderdiscussioninitsrelationstothecontemporarystage
ofsocialdevelopment。ItcannotbedoubtedthatHumeexercisedamostimportantinfluenceonAdamSmith，whointheWealthofNations（20）callshim\"byfarthemostillustriousphilosopherandhistorianofthepresentage，\"andwhoesteemed
hischaractersohighlythat，afterafriendshipofmanyyearshadbeenterminatedbyHume’sdecease，hedeclaredhimto
have\"approachedasnearlytotheidealofaperfectlywiseandvirtuousmanasperhapsthenatureofhumanfrailtywill
permit。\"
JosiahTucker，deanofGloucester（d。1799），holdsadistinguishedplaceamongtheimmediatepredecessorsofSmith。Most
ofhisnumerousproductionshaddirectreferencetocontemporaryquestions，and，thoughmarkedbymuchsagacityand
penetration，aredeficientinpermanentinterest。InsomeoftheseheurgedtheimpolicyofrestrictionsonthetradeofIreland，
advocatedaunionofthatcountrywithEngland，andrecommendedtherecognitionoftheindependenceoftheUnitedStates
ofAmerica。Themostimportantofhisgeneraleconomicviewsarethoserelatingtointernationalcommerce。Heisanardent
supporteroffree—tradedoctrines，whichhebasesontheprinciplesthatthereisbetweennationsnonecessaryantagonism，
butratheraharmony，ofinterests，andthattheirseverallocaladvantagesanddifferentaptitudesnaturallypromptthemto
exchange。Hehadnot，however，gotquiteclearofmercantilism，andfavouredbountiesonexportedmanufacturesandthe
encouragementofpopulationbyataxoncelibacy。Dupont，andafterhimBlanqui，representTuckerasafollowerofthe
physiocrats，butthereseemstobenogroundforthisopinionexcepthisagreementwiththemonthesubjectofthefreedom
oftrade。TurgottranslatedintoFrench（1755），underthetitleofQuestionsImportantessurleCommerce，atractbyTucker
onTheExpediencyofaLawfortheNaturalisationofForeignProtestants。
In1767waspublishedSirJamesSteuart’sInquiryintothePrincipalsofPoliticalEconomy。Thiswasoneofthemost
unfortunateofbooks。Itwasthemostcompleteandsystematicsurveyofthescienceiromthepointofviewofmoderate
mercantilismwhichhadappearedinEngland。Steuartwasamanofnoordinaryabilities，andhadpreparedhimselfforhis
taskbylongandseriousstudy。Butthetimeforthemercantiledoctrineswaspast，andthesystemofnaturallibertywasin
possessionofanintellectualascendencywhichforeshadoweditspoliticaltriumph。NineyearslatertheWealthofNationswasgiventotheworld，aworkassuperiortoSteuart’sinattractivenessofstyleasinscientificsoundness。Thusthelatter
waspredestinedtofail，andinfactneverexercisedanyconsiderabletheoreticorpracticalinfluence。Smithneverquotesor
mentionsit;beingacquaintedwithSteuart，whoseconversationhesaidwasbetterthanhisbook，heprobablywishedtokeep
clearofcontroversywithhim。（21）TheGermaneconomistshaveexaminedSteuart’streatisemorecarefullythanEnglish
writershavecommonlydone;andtheyrecogniseitshighmerits，especiallyinrelationtothetheoryofvalueandthesubject
ofpopulation。Theyhavealsopointedoutthat，inthespiritofthebestrecentresearch，hehasdweltonthespecialcharacters
whichdistinguishtheeconomiespropertodifferentnationsanddifferentgradesinsocialprogress。
ComingnowtothegreatnameofAdamSmith（1723—1790），itisofthehighestimportancethatweshouldrightly
understandhispositionandjustlyestimatehisclaims。Itisplainlycontrarytofacttorepresenthim，assomehavedone，as
thecreatorofpoliticaleconomy。Thesubjectofsocialwealthhadalwaysinsomedegree，andincreasinglyinrecenttimes，
engagedtheattentionofphilosophicminds。Thestudyhadevenindisputablyassumedasystematiccharacter，and，from
beinganassemblageoffragmentarydisquisitionsonparticularquestionsofnationalinterest，hadtakentheform，notablyin
Turgot’sRéflexions，ofanorganisedbodyofdoctrine。Thetruthis，thatSmithtookupthesciencewhenitwasalready
considerablyadvanced;anditwasthisverycircumstancewhichenabledhim，bytheproductionofaclassicaltreatise，to
rendermostofhispredecessorsobsolete。But，whilstalltheeconomiclaboursoftheprecedingcenturiespreparedtheway
forhim，theydidnotanticipatehiswork。Hisappearanceatanearlierstage，orwithoutthosepreviouslabours，wouldbe
inconceivable;buthebuilt，onthefoundationwhichhadbeenlaidbyothers，muchofhisownthatwaspreciousand
enduring。
EventhosewhodonotfallintotheerrorofmakingSmiththecreatorofthescience，oftenseparatehimtoobroadlyfrom
Quesnayandhisfollowers，andrepresentthehistoryofmodernEconomicsasconsistingofthesuccessiveriseandreignof
threedoctrines——themercantile，thephysiocratic，andtheSmithian。Thelasttwoare，itistrue，atvarianceinsomeeven
importantrespects。Butitisevident，andSmithhimselffelt，thattheiragreementsweremuchmorefundamentalthantheir
differences;and，ifweregardthemashistoricalforces，theymustbeconsideredasworkingtowardsidenticalends。They
bothurgedsocietytowardstheabolitionofthepreviouslyprevailingindustrialpolicyofEuropeanGovernments;andtheir
argumentsagainstthatpolicyrestedessentiallyonthesamegrounds。WhilstSmith’scriticismwasmoresearchingand
complete，healsoanalysedmorecorrectlythanthephysiocratssomeclassesofeconomicphenomena——inparticular
dispellingtheillusionsintowhichtheyhadfallenwithrespecttotheunproductivenatureofmanufacturesandcommerce。
Theirschooldisappearedfromthescientificfield，notmerelybecauseitmetwithapoliticalcheckinthepersonofTurgot，
butbecause，aswehavealreadysaid，theWealthofNationsabsorbedintoitselfallthatwasvaluableintheirteaching，whilst
itcontinuedmoreeffectuallytheimpulsetheyhadgiventothenecessaryworkofdemolition。
Thehistoryofeconomicopinioninmoderntimes，downtothethirddecadeofthenineteenthcentury，is，infact，strictly
bipartite。Thefirststageisfilledwiththemercantilesystemwhich，aswehaveshown，wasratherapracticalpolicythana
speculativedoctrine，andwhichcameintoexistenceasthespontaneousgrowthofsocialconditionsactingonmindsnot
trainedtoscientifichabits。Thesecondstageisoccupiedwiththegradualriseandultimateascendencyofanothersystem
foundedontheideaoftherightoftheindividualtoanunimpededspherefortheexerciseofhiseconomicactivity。Withthe
latter，whichisbestdesignatedasthe\"systemofnaturalliberty，\"weoughttoassociatethememoryofthephysiocratsas
wellasthatofSmith，without，however，maintainingtheirservicestohavebeenequaltohis。
TheteachingofpoliticaleconomywasintheScottishuniversitiesassociatedwiththatofmoralphilosophy。Smith，asweare
told，conceivedtheentiresubjecthehadtotreatinhispubliclecturesasdivisibleintofourheads，thefirstofwhichwas
naturaltheology，thesecondethics，thethirdjurisprudence;whilstinthefourth\"heexaminedthosepoliticalregulations
whicharefoundeduponexpediency，andwhicharecalculatedtoincreasetheriches，thepower，andtheprosperityofa
state。\"Thelasttwobranchesofinquiryareregardedasformingbutasinglebodyofdoctrineinthewell—knownpassageof
theTheoryofMoralSentiments（1759）inwhichtheauthorpromisestogiveinanotherdiscourse\"anaccountofthegeneral
principlesoflawandgovernment，andofthedifferentrevolutionstheyhaveundergoneinthedifferentagesandperiodsof
society，notonlyinwhatconcernsjustice，butinwhatconcertspolice，revenue，andarms，andwhateverelseisthesubjectof
law。\"ThisshowshowlittleitwasSmith’shabittoseparate（exceptprovisionally），inhisconceptionsorhisresearches，the
economicphenomenaofsocietyfromalltherest。Thewordsabovequotedhave，indeed，beennotunjustlydescribedas
containing\"ananticipation，wonderfulforhisperiod，ofgeneralSociology，bothstaticalanddynamical，ananticipation
whichbecomesstillmoreremarkablewhenwelearnfromhisliteraryexecutorsthathehadformedtheplanofaconnected
historyoftheliberalsciencesandelegantarts，whichmusthaveaddedtothebranchesofsocialstudyalreadyenumerateda
viewoftheintellectualprogressofsociety。\"Thoughtheselargedesignswerenevercarriedoutintheirintegrity，asindeed
atthatperiodtheycouldnothavebeenadequatelyrealised，ithasresultedfromthemthat，thougheconomicphenomena
formthespecialsubjectoftheWealthofNations，Smithyetincorporatedintothatworkmuchthatrelatestotheothersocial
aspects，incurringtherebythecensureofsomeofhisfollowers，whoinsistwithpedanticnarrownessonthestrictisolationof
theeconomicdomain。
Therehasbeenmuchdiscussiononthequestion——WhatisthescientificmethodfollowedbySmithinhisgreatwork？By
someitisconsideredtohavebeenpurelydeductive，aviewwhichBucklehasperhapscarriedtothegreatestextreme。He
assertsthatinScotlandtheinductivemethodwasunknown，thattheinductivephilosophyexercisednoinfluenceonScottish
thinkers;and，thoughSmithspentsomeofthemostimportantyearsofhisyouthinEngland，wheretheinductivemethod
wassupreme，andthoughhewaswidelyreadingeneralphilosophicalliterature，heyetthinksheadoptedthedeductive
methodbecauseitwehabituallyfollowedinScotland，——andthisthoughBucklemaintainsthatitistheonlyappropriate，or
evenpossible，methodinpoliticaleconomy，whichsurelywouldhavebeenasufficientreasonforchoosingit。Thatthe
inductivespiritexercisednoinfluenceonScottishphilosophersiscertainlynottrue;aswillbepresentlyshown，
Montesquieu，whosemethodisessentiallyinductive，wasinSmith’stimestudiedwithquitepeculiarcareandregardedwith
specialvenerationbySmith’sfellow—countrymen。AstoSmithhimself，whatmayjustlybesaidofhimisthatthedeductive
bentwascertainlynotthepredominantcharacterofhismind，nordidhisgreatexcellencelieinthe\"dialecticskill\"which
Buckleascribestohim。Whatstrikesusmostinhisbookishiswideandkeenobservationofsocialfacts，andhisperpetual
tendencytodwellontheseandelicittheirsignificance，insteadofdrawingconclusionsfromabstractprinciplesbyelaborate
chainsofreasoning。Itisthishabitofhismindwhichgivesus，inreadinghim，sostrongandabidingasenseofbeingin
contactwiththerealitiesoflife。
ThatSmithdoes，however，largelyemploythedeductivemethodiscertain;andthatmethodisquitelegitimatewhenthe
premisesfromwhichthedeductionsetsoutareknownuniversalfactsofhumannatureandpropertiesofexternalobjects。
Whetherthismodeofproceedingwillcarryusfarmayindeedwellbedoubted;butitssoundnesscannotbedisputed。But
thereisanotherviciousspeciesofdeductionwhich，asCliffeLesliehasshown，seriouslytaintedthephilosophyofSmith——
inwhichthepremisesarenotfactsascertainedbyobservation，butthesameaprioriassumptions，halftheologicalhalf
metaphysical，respectingasupposedharmoniousandbeneficentnaturalorderofthingswhichwefoundinthephysiocrats，
andwhich，aswesaw，wereembodiedinthenameofthatsect。Inhisview，Naturehasmadeprovisionforsocialwell—being
bytheprincipleofthehumanconstitutionwhichpromptseverymantobetterhiscondition:theindividualaimsonlyathis
privategain，butindoingsois\"ledbyaninvisiblehand\"topromotethepublicgood，whichwasnopartofhisintention;
humaninstitutions，byinterferingwiththeactionofthisprincipleinthenameofthepublicinterest，defeattheirownend;
but，whenallsystemsofpreferenceorrestraintaretakenaway，\"theobviousandsimplesystemofnaturallibertyestablishes
itselfofitsownaccord。\"Thistheoryis，ofcourse，notexplicitlypresentedbySmithasafoundationofhiseconomic
doctrines，butitisreallythesecretsubstratumonwhichtheyrest。Yet，whilstsuchlatentpostulateswarpedhisviewof
things，theydidnotentirelydeterminehismethod。Hisnativebenttowardsthestudyofthingsastheyarepreservedhim
fromextravagancesintowhichmanyofhisfollowershavefallen。Butbesidesthis，asLesliehaspointedout，theinfluenceof
Montesquieutendedtocounterbalancethetheoreticprepossessionsproducedbythedoctrineofthejusnaturae。Thatgreat
thinker，thoughhecouldnot，athisperiod，understandthehistoricalmethodwhichistrulyappropriatetosociological
inquiry，yetfoundedhisconclusionsoninduction。Itistrue，asComtehasremarked，thathisaccumulationoffacts，
borrowedfromthemostdifferentstatesofcivilisation，andnotsubjectedtophilosophiccriticism，necessarilyremainedon
thewholesterile，oratleastcouldnotessentiallyadvancethestudyofsocietymuchbeyondthepointatwhichhefoundit。
Hismerit，aswehavebeforementioned，layintherecognitionofthesubjectionofallsocialphenomenatonaturallaws，not
inthediscoveryofthoselaws。ButthislimitationwasoverlookedbythephilosophersofthetimeofSmith，whoweremuch
attractedbythesystemhefollowedoftracingsocialfactstothespecialcircumstances，physicalormoral，ofthe
communitiesinwhichtheywereobserved。LesliehasshownthatLordKaimes，Dalrymple，andMillar——contemporariesof
Smith，andthelasthispupil——wereinfluencedbyMontesquieu;andhemighthaveaddedthemoreeminentnameof
Ferguson，whoserespectandadmirationforthegreatFrenchmanareexpressedinstrikingtermsinhisHistoryofCivil
Society。（22）WeareeveninformedthatSmithhimselfinhislateryearswasoccupiedinpreparingacommentaryontheEspiritdesLois。（23）hewasthusaffectedbytwodifferentandincongruoussystemsofthought——onesettingoutfroman
imaginarycodeofnatureintendedforthebenefitofman，andleadingtoanoptimisticviewoftheeconomicconstitution
foundedonenlightenedself—interest;theotherfollowinginductiveprocesses，andseekingtoexplaintheseveralstatesin
whichhumansocietiesarefoundexisting，asresultsofcircumstancesorinstitutionswhichhavebeeninactualoperation。
Andwefindaccordinglyinhisgreatworkacombinationofthesetwomethods——inductiveinquiryontheonehand，and，on
theotherapriorispeculationfoundedonthe\"Nature\"hypothesis。Thelatterviciousproceedinghasinsomeofhisfollowers
beengreatlyaggravated，whilethecountervailingspiritofinductiveinvestigationhasfallenintothebackground，andindeed
thenecessityorutilityofanysuchinvestigationintheeconomicfieldhasbeensometimesaltogetherdenied。
SomehaverepresentedSmith’sworkasofsolooseatextureandsodefectiveanarrangementthatitmaybejustlydescribed
asconsistingofaseriesofmonographs。Butthisiscertainlyanexaggeration。Thebook，itistrue，isnotframedonarigid
mould，noristhereanyparadeofsystematicdivisionsandsubdivisions;andthisdoubtlessrecommendedittomenofthe
worldandofbusiness，forwhoseinstructionitwas，atleastprimarilyintended。Butithastherealandpervadingunitywhich
resultsfromasetofprinciplesandamodeofthinkingidenticalthroughoutandthegeneralabsenceofsuchcontradictionsas
wouldarisefromanimperfectdigestionofthesubject。
Smithsetsoutfromthethoughtthattheannuallabourofanationisthesourcefromwhichitderivesitssupplyofthe
necessariesandconveniencesoflife。Hedoesnotofcoursecontemplatelabourastheonlyfactorinproduction;butithas
beensupposedthatbyemphasisingitattheoutsetheatoncestrikesthenoteofdifferencebetweenhimselfontheonehand
andboththemercantilistsandthephysiocratsontheother。Theimprovementintheproductivenessoflabourdepends
largelyonitsdivision;andheproceedsaccordinglytogivehisunrivalledexpositionofthatprinciple，ofthegroundson
whichitrests，andofitsgreaterapplicabilitytomanufacturesthantoagriculture，inconsequenceofwhichthelatter
relativelylagsbehindinthecourseofeconomicdevelopment。（24）Theoriginofthedivisionoflabourhefindsinthe
propensityofhumannature\"totruck，barter，orexchangeonethingforanother。\"Heshowsthatacertainaccumulationof
capitalisaconditionprecedentofthisdivision，andthatthedegreetowhichitcanbecarriedisdependentontheextentof
themarket。Whenthedivisionoflabourhasbeenestablished，eachmemberofthesocietymusthaverecoursetotheothers
forthesupplyofmostofhiswants;amediumofexchangeisthusfoundtobenecessary，andmoneycomesintouse。The
exchangeofgoodsagainsteachotheroragainstmoneygivesrisetothenotionofvalue。Thiswordhastwomeanings——that
ofutility，andthatofpurchasingpower;theonemaybecalledvalueinuse，theothervalueinexchange。Merelymentioning
theformer，Smithgoesontostudythelatter。What，heasks，isthemeasureofvalue？whatregulatestheamountofone
thingwhichwillbegivenforanother？\"Labour，\"Smithanswers，\"istherealmeasureoftheexchangeablevalueofall
commodities。\"\"Equalquantitiesoflabour，atalltimesandplaces，areofequalvaluetothelabourer。\"（25）\"Labouralone，
therefore，nevervaryinginitsownvalue，isalonetheultimateandrealstandardbywhichthevalueofallcommoditiescanat
alltimesandplacesbeestimatedandcompared。Itistheirrealprice;moneyistheirnominalpriceonly。\"Money，however，is
inmen’sactualtransactionsthemeasureofvalue，aswellasthevehicleofexchange;andthepreciousmetalsarebestsuited
forthisfunction，asvaryinglittleintheirownvalueforperiodsofmoderatelength;fordistanttimes，cornisabetter
standardofcomparison。Inrelationtotheearliestsocialstage，weneedconsidernothingbuttheamountoflabouremployed
intheproductionofanarticleasdeterminingitsexchangevalue;butinmoreadvancedperiodspriceiscomplex，and
consistsinthemostgeneralcaseofthreeelements——wages，profit，andrent。Wagesaretherewardoflabour。Profitarisesas
soonasstock，beingaccumulatedinthehandsofoneperson，isemployedbyhiminsettingotherstowork，andsupplying
themwithmaterialsandsubsistence，inordertomakeagainbywhattheyproduce。Rentarisesassoonasthelandofa
countryhasallbecomeprivateproperty;\"thelandlords，likeallothermen，lovetoreapwheretheyneversowed，and
demandarentevenforitsnaturalproduce。\"Ineveryimprovedsociety，then，thesethreeelementsentermoreorlessintothe
priceofthefargreaterpartofcommodities。Thereisineverysocietyorneighbourhoodanordinaryoraveragerateof
wagesandprofitineverydifferentemploymentoflabourandstock，regulatedbyprinciplestobeexplainedhereafter，asalso
anordinaryoraveragerateofrent。Thesemaybecalledthenaturalratesatthetimewhenandtheplacewheretheyprevail;
andthenaturalpriceofacommodityiswhatissufficienttopayfortherentoftheland，（26）thewagesofthelabour，andthe
profitofthestocknecessaryforbringingthecommoditytomarket。Themarketpricemayriseaboveorfallbelowthe
amountsofixed，beingdeterminedbytheproportionbetweenthequantitybroughttomarketandthedemandofthosewho
arewillingtopaythenaturalprice。Towardsthenaturalpriceasacentrethemarketprice，regulatedbycompetition，
constantlygravitates。Somecommodities，however，aresubjecttoamonopolyofproduction，whetherfromthepeculiarities
ofalocalityorfromlegalprivilegetheirpriceisalwaysthehighestthatcanbegot;thenaturalpriceofothercommoditiesis
thelowestwhichcanbetakenforanylengthoftimetogether。Thethreecomponentpartsorfactorsofpricevarywiththe
circumstancesofthesociety。Therateofwagesisdeterminedbya\"dispute\"orstruggleofoppositeinterestsbetweenthe
employerandtheworkman。Aminimumrateisfixedbytheconditionthattheymustbeatleastsufficienttoenableaman
andhiswifetomaintainthemselvesand，ingeneral，bringupafamily。Theexcessabovethiswilldependonthe
circumstancesofthecountryandtheconsequentdemandforlabour——wagesbeinghighwhennationalwealthisincreasing，
lowwhenitisdeclining。Thesamecircumstancesdeterminethevariationofprofits，butinanoppositedirection;theincrease
ofstock，whichraiseswages，tendingtolowerprofitthroughthemutualcompetitionofcapitalists。\"Thewholeofthe
advantagesanddisadvantagesofthedifferentemploymentsoflabourandstockmust，inthesameneighbourhood，beeither
perfectlyequalorcontinuallytendingtoequality\";ifonehadgreatlytheadvantageovertheothers，peoplewouldcrowd
intoit，andthelevelwouldsoonberestored。Yetpecuniarywagesandprofitsareverydifferentindifferentemployment——
eitherfromcertaincircumstancesaffectingtheemployments，whichrecommendordisparagetheminmen’snotions，orfrom
nationalpolicy，\"whichnowhereleavesthingsatperfectliberty。\"HerefollowsSmith’sadmirableexpositionofthecauses
whichproducetheinequalitiesinwagesandprofitsjustreferredto，apassageaffordingampleevidenceofhishabitsofnice
observationofthelessobvioustraitsinhumannature，andalsooftheoperationbothoftheseandofsocialinstitutionson
economicfacts。Therentoflandcomesnexttobeconsidered，asthelastofthethreeelementsofprice。Rentisamonopoly
price，equal，nottowhatthelandlordcouldaffordtotake，buttowhatthefarmercanaffordtogive，\"Suchpartsonlyofthe
produceoflandcancommonlybebroughttomarket，ofwhichtheordinarypriceissufficienttoreplacethestockwhich
mustbeemployedinbringingthemthither，togetherwiththeordinaryprofits。Iftheordinarypriceismorethanthis;the
surpluspartwillnaturallygototherentoftheland。Ifitisnotmore，thoughthecommoditymaybebroughttomarket，it
canaffordnorenttothelandlord，Whetherthepriceisorisnotmoredependsonthedemand。\"\"Rent，therefore，entersinto
thepriceofcommoditiesinadifferentwayfromwagesandprofits。Highorlowwagesandprofitarethecausesofhighor
lowprice;highorlowrentistheeffectofit。\"
Rent，wages，andprofits，astheyaretheelementsofprice，arealsotheconstituentsofincome;andthethreegreatordersof
everycivilisedsociety，fromwhoserevenuesthatofeveryotherorderisultimatelyderived，arethelandlords，thelabourers，
andthecapitalists。Therelationoftheinterestsofthesethreeclassestothoseofsocietyatlargeisdifferent。Theinterestof
thelandlordalwayscoincideswiththegeneralinterest:whateverpromotesorobstructstheonehasthesameeffectonthe
other。Soalsodoesthatofthelabourer:whenthewealthofthenationisprogressive，hiswagesarehigh;theyarelowwhen
itisstationaryorretrogressive。\"Theinterestofthethirdorderhasnotthesameconnectionwiththegeneralinterestofthe
societyasthatoftheothertwo;……itisalwaysinsomerespectsdifferentfromandoppositetothatofthepublic。\"
Thesubjectofthesecondbookis\"thenature，accumulation，andimprovementofstock。\"Aman’swholestockconsistsof
twoportions——thatwhichisreservedforhisimmediateconsumption，andthatwhichisemployedsoastoyieldarevenueto
itsowner。Thislatter，whichishis\"capital，\"isdivisibleintothetwoclassesof\"fixed\"and\"circulating。\"Thefirstissuchas
yieldsaprofitwithoutpassingintootherhands。Thesecondconsistsofsuchgoods，raised，manufactured，orpurchased，as
aresoldforaprofitandreplacedbyothergoods;
